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From recent dealings, the Ministry of Commerce doesn’t appear to be a wellspring of support for the right of Australia’s iron ore producers to maximise their profit per tonne of iron ore ultimately owned by the taxpayers of Western Australia.

The ongoing argy bargy between the officials at the top of the resource vulnerable Chinese economy and the iron ore industry comes as two heavyweight representatives of “monopolists"
BHP Billiton
and
Rio Tinto
were in Beijing for the China Development Forum.

BHP chairman
Jac Nasser
attended, while Rio Tinto boss
Tom Albanese
presented a speech at the forum attended by chief executives and chairmen of the world’s leading companies.

The two companies have stepped up efforts to smoothe over relations as they power ahead with multi-billion dollar expansions to provide the iron ore China wants.

Albanese talked up Rio Tinto’s relationship with its biggest customer. No mention was made of Rio Tinto’s decision to turn its back on a $US19.5 billion strategic alliance with Chinese aluminium giant Chinalco two years ago.

But Albanese seems intent on repairing the relationship, highlighting last year’s deal with Chinalco that will give its listed subsidiary Chalco 47 per cent of Rio’s stake in the Simandou iron ore project in Guinea.

And then there are cold war warriors like Luo who continue to whip up a frenzy over a commodity that is at the heart of the trade relationships between China and Australia. In the eyes of the Chinese steel mills, the iron ore miners are uniquely at fault for the small margins being endured.

There is no blame slated to the industry itself which is plagued by overcapacity, inefficient technologies and weighed down by workforces that dwarf those in more productive steel mills around the globe.

Let’s assemble the facts. China didn’t like the annual benchmark pricing negotiations, so much so that during the global financial crisis some Chinese steel mills reneged on binding supply contracts.

China walked away from the final attempt at annual negotiations, which eventually led to the current system.

Who knows what measures the Chinese government will come up with to help steel makers resist prices that are now determined by short-term contracts. Gone are the days of annual price negotiations with Rio Tinto and BHP Billiton moving to quarterly and monthly pricing respectively. Or, as Luo reportedly said, mining giants do not negotiate prices with their Chinese buyers any more. Rather, they give them notice before price hikes.

That may be true. But that’s no different from other industries where companies inform customers when they are raising prices.

At the end of the day, it’s a market-based system. China can choose to meet the market or it can choose to not meet the market.